CUPE makes submission to the Newfoundland and Labrador automobile insurance system review

creynolds News Release, Report

CUPE Newfoundland Labrador welcomes the opportunity to participate in Phase II of the comprehensive review of the province’s automobile insurance system that has been undertaken by the Public Utilities Board in Newfoundland and Labrador. The union has made a submission to the review.

“Premiums for automobile insurance in Newfoundland and Labrador are among the highest in the country,” says Wayne Lucas, CUPE NL president. “The provincial government requires drivers to purchase automobile insurance. Therefore, it must make sure that costs are reasonable and benefits are fair.”

A small number of companies have a stranglehold on the automobile insurance market in the province, leading to higher rates and reduced benefits. Long-established public automobile insurance companies in British Columbia, Quebec, Manitoba and Saskatchewan offer good insurance products at lower premiums and generate capital to re-invest in their respective provinces.

“There are ample experiences in other jurisdictions to help create a ‘made-in-Newfoundland-Labrador’, full-service system that will meet the vehicle insurance needs of the people of our province,” says Lucas.

CUPE NL supports the development of a publicly owned, full service, non-profit automobile insurance system to deliver comprehensive, no-fault insurance to all licensed drivers in the province, including private passenger drivers, independent commercial owner-operators and fleet company drivers (such as trucking, courier, and taxi companies) at fair, non-discriminatory rates.

 

Photo by Shankar.S is licensed under CC BY 2.0.

Osborne drops the ball in bargaining

creynolds Crossroads, News Release

St. John’s – Representatives of the Canadian Union of Public Employees (CUPE), Newfoundland and Labrador Division, say Minister of Finance Tom Osborne is attempting to recover after dropping the ball in negotiations, landing himself in disputes of his own making.

“The ‘spotlight’ that Minister Osborne referenced yesterday was created by the minister himself,” says Brian Farewell, CUPE national representative. “He negotiated a tentative agreement with another bargaining agent and afterward he reacted without thinking when faced with publicity from the business community.”

The minister then decided to go back to the other bargaining agent and request a “sidebar” letter, confirming the fact that the no-layoff clause would not carry over into any subsequent agreement.

“CUPE is not seeking changes to the no-layoff language. We have already agreed to the no-layoff language,” says Farewell. “In addition, we have given the minister a side-bar comfort letter concerning the no-layoff clause.”

The minister, in front of five CUPE bargaining committee agents, confirmed that CUPE’s letter relieved any concerns or anxieties he had concerning the no-layoff clause rolling over into subsequent agreements. He also candidly admitted that he didn’t expect CUPE to agree to the other side-bar letter.

“It is perplexing to CUPE that our sidebar letter is not acceptable. Mr. Osborne is either not understanding the issue or attempting to deceive the public. Neither scenario is acceptable,” says Farwell.

“We will not jeopardize all our efforts made in collective bargaining since we became a voice for workers in this province 55 years ago, says CUPE NL President Wayne Lucas. “Our priority is protecting our members. As it should be.”

CUPE Atlantic Annual Weeklong School 2018

creynolds Article, Workshop

May 6 to 11, 2018

The Atlantic Region’s 33rd Annual Weeklong School will take place at the Inverary Resort in Baddeck, Nova Scotia. The cost for this year’s weeklong school (including registration fee, accommodation and meals) is $900.00 per participant – double room occupancy; and $1,200.00 per person – single room occupancy.

As in previous years, there are scholarships available to members in both provinces and you are encouraged to apply as per the information contained in the brochure.

We encourage each local to make your selection as early as possible and return your registration form along with your post-dated cheque to avoid disappointment.

Once a maximum of 20-24 participants for each workshop have been registered, no further registrations will be accepted but you may choose to go on the wait list for that workshop or select an alternate workshop.

The deadline for registration and payment to be received at the Atlantic Regional Office is April 27, 2018. If payment is not received by April 27, 2018, those respective registrants will be removed, the registration list for each workshop finalized and those registrants on the waiting lists will be notified whether space is available.

When selecting participants for the school, please consider those who are prepared to take an active role in this learning experience and who will abide by the rules and guidelines for conduct and attendance.

Please consider members who:

  • actively participate in your Local
  • are willing to be active but could benefit from additional training
  • are willing to share this knowledge with the Local membership and Executive when he/she returns

Should there be any questions or concerns, please do not hesitate to contact me at the Atlantic Regional Office (902) 455-4180.

Payment

Please post-date your registration cheques for May 12, 2018. Registration cheques are not processed until the weeklong school has concluded.

Make cheque payable to the Canadian Union of Public Employees and forward to the Registrar at the Atlantic Regional Office before the deadline of April 27, 2018 to:

Lynn McDougall
Union Development Representative
CUPE Atlantic Regional Office
271 Brownlow Avenue
Dartmouth, NS B3B 1W6

Refund Policy

Full refund up to April 27, 2018

No refund after April 27, 2018           

Courses

#1 – Mental Health in the Workplace: A union perspective

Officially, mental illness affects 1 in 5 people in Canada. But we know that it touches every one of us in different ways throughout our lives. What does this mean for us as workers and Union activists? How can we support members dealing with mental illness, and how can we hold employers to account, ensuring that our workplaces promote mental wellness? As union activists we have a particular interest in promoting positive workplace culture that supports people living with mental illness and promotes wellness for all of us.

This workshop is designed for participants to:

  • Gain a better understanding of mental health issues
  • Learn about stigma and how to challenge stereotypes about mental health
  • Explore the employer role: providing safe and supportive workplaces; and, reducing the risk of mental injury
  • Explore the Union’s role: educating the membership; and, accommodating workers with mental illness
  • Learn about supports and resources for people living with mental health issues
  • Build skills to support and educate one another to make our unions and our workplaces mentally healthy.

Requirement: Please bring any contact information for crisis and counselling services in your area.

#2 – Media Training

Are you a spokesperson for your local? Do you want to attract media attention, and increase public awareness to support local bargaining or an event? Please join us for our weeklong media training and message development workshop!

Participants will learn how can the media outreach can benefit your local in getting messages out. Each participant will receive “on-air” practice with feedback, as well as training and tips for writing messages and developing a media relations plan.

During the workshop, you will learn:

  • Basic principles of good communications and a media relations plan
  • Recognize the elements of great media messages
  • Create memorable stories, messages and sound bites
  • Understand the best practices of working with the media
  • Identify your target audience
  • Interview for print, radio, and television with confidence
  • Tips about remaining “on message” and how to answer the tough questions
  • Writing effective letters to the editor to submit to newspapers
  • Supporting your communications activities with social media

Who Should Attend?

This workshop is ideally suited for spokespersons for local unions, divisions or sector committees.

Prerequisites:

Participants must already be familiar with using their laptop and smartphone. They must also be active on personal Facebook and/or Twitter.

Please note: This workshop will not include an introduction to social media for beginners.

Requirement: Please bring all your devices including a laptop, tablet and/or smartphone.

#3 – Local Executive Training (LET)

The Local Executive Training series was developed to aid local executives toward functioning at their very best. This weeklong will include the following LET workshops:  Leadership Basics, Leading as a Team, Conflict-Ready Executives, Financial Essentials and, Strategic Planning.

We will:

  • Examine the roles and responsibilities of the elected officers and how they intersect/interact
  • Explore how we work in teams, and how to balance our leadership styles to engage each other, the membership and work effectively across diversity
  • Ask ourselves Who am I as a leader? Who are we as a local union? Who do we want to be?
  • Explore how you can use the power of your elected position to build power in the union, create space for more members to get involved
  • Explore the value of conflict for effective groups; how our beliefs about conflict shape how we respond; the kinds of conflict Local Executive struggle with most; and, productive ways to resolve conflict
  • Understand the essentials of Local Union finances, including the role of finances in strategic planning
  • Explore strategic planning tools as methods for problem-solving: from managing the relationship with the employer to communicating with members to expanding the Executive’s ability to build capacity and activism…it all starts with a plan! Explore how to set achievable and measurable goals for your Local Executive and your Local Union.

#4 – Bargaining

We will examine and experience bargaining from beginning to end. We will:

  • Review the bargaining process and the obligations of the Local Union Bargaining Team
  • Prepare the team and the membership for a round of bargaining
  • Go to the table and hopefully get a deal!
  • Conduct a Bargaining Post Mortem
  • Examine how strategic planning, including communication strategies, can assist a Bargaining Team in managing their own, and the memberships’ expectations

Click here to register.  

Download a copy of 2018 weeklong brochure, including registration information, course descriptions, agenda and scholarship application forms.

Member Update: Master Bargaining – April 5, 2018

creynolds Bargaining Update

On behalf of the CUPE NL staff and the seven bargaining committees, we would like to thank you for your patience and support as we continue our attempt to secure new collective agreements with this provincial government. We are now in excess of two years without new contracts. The exercise to date has been extremely frustrating for your committees who find themselves in a political forum dealing with Treasury Board and not with their employers.

There has been much media around our meetings with the Minister of Finance and his officials since we began Tier 2 bargaining in January of this year. CUPE has not been trying to “reinvent the wheel” at these meetings. We totally understand template bargaining in this province and fully recognize that many, if not most, of the major issues have already been settled at a previous bargaining table. More importantly, however, we accept our responsibility to bargain fair and reasonable collective agreements for our members without discrimination or jeopardizing the status of those contracts upon their conclusion.

There are three main issues that are preventing us from concluding new collective agreements. They are as follows:

  • The government is demanding that CUPE sign a “comfort” sidebar letter regarding the no-layoff article that has been previously agreed. This letter was supposedly required to provide the minister and his government assurance that this no-layoff commitment wouldn’t automatically carry forward into any future agreements.CUPE offered the following: “the parties agree that this document (no layoff letter) will not roll over into subsequent collective agreements …”The government is demanding the following: “the parties agree that any provision in the collective agreements…do not automatically roll over into subsequent collective agreements…”The difference between these two versions is vast and CUPE cannot, and will not, sign a letter which has the potential to jeopardize the future status of our collective agreements. At contract year-end, we could find ourselves starting from scratch with every article in the agreement. Current agreement language that has been in our contract for years could be off the table. This isn’t a necessary or reasonable proposal from Treasury Board. The government wants a comfort letter – we offered them a comfort letter. They are not getting an automatic access to our collective agreements.
  • There are still a number of outstanding local issues which are extremely important to our members, some of which are non-monetary. For instance, five out of six of our Group and Transition Homes are not presently included in the Provident 10 pension plan or the provincial government benefit plan. There is no rational reason why this is the case. There are 21 unionized Group Homes under this provincial government – all of which are presently certified under the Public Service Collective Bargaining Act. Nineteen of them are in both plans, but only one out of our six are included. Most of these workers are female and it is very much an equity issue.Another outstanding issue concerns the Local 1860 Housing Corporation collective agreement. This collective agreement makes no reference to a group benefit plan – even though there is one in place. To date, we have been unable to get them to simply acknowledge such a plan. This situation flies in the face of all other CUPE public sector collective agreements. This is a non-monetary issue that needs to be rectified.
  • Lastly, we are currently in dispute with government over a new Letter of Understanding regarding the eligibility of retirees to access their benefits. New proposed language seems to restrict access unless you retire from “active employment”.  This terminology appears to prevent workers on Long Term Disability, Workers Compensation or unpaid sick leave, who retire directly from these plans, from receiving their benefits. This issue is still very much outstanding and needing clarification.

CUPE staff and committee members continue to hold conference calls on a regular basis and are anxious to return to the bargaining table. We will strive to reach new collective agreements, but we must remain committed to not accepting proposals or positions from government such as those noted above.

We will continue to update our members, to the fullest extent that we are able, throughout the process.  All updates, including this one, will be posted on our CUPE NL website and will be sent to all local officers for distribution. We greatly appreciate your solidarity and support.  It is essential for our committees to retain their resolve, energy and determination to take on the task before them.

Download a printable copy of this member update.

They pushed, they protested, they won: NL public libraries saved

creynolds News Release

CUPE Newfoundland Labrador is very pleased to hear Minister Kirby announce that all the province’s libraries will remain open, and suggest that new libraries may be coming.

Since government’s announcement in 2016, CUPE has been fighting to ensure that the libraries remain open, providing necessary library services to the citizens of Newfoundland and Labrador.

Dawn Lahey, president of CUPE 2329, which represents workers in the provincial library system, says, “It’s such wonderful news. Our members have been working in a very difficult situation, wondering every day whether or not they will have a job tomorrow. It’s unfortunate that it took so long for the government to make it clear that they are committed to library services for the people of Newfoundland and Labrador.”

CUPE would like to thank everyone in the province who fought alongside us in the struggle for libraries. Especially the New Democratic Party, local library boards, CUPE members, especially those in Local 2329, library patrons and the community in general.

“This would not have been possible without each and every individual who stood up for the kind of community we want to live in. A community which includes libraries, and the excellent services provided by members of CUPE Local 2329,” says Wayne Lucas, president of CUPE Newfoundland Labrador.

“I’m personally very pleased to hear the minister confirm that our library workers can rest easy, knowing their jobs are safe. I’d like to thank Minister Kirby for his work on this file,” says Lucas.

 

Annual renewal of group insurance – All active employees

creynolds Uncategorized

This memorandum outlines the details of the annual renewal for your Group Insurance Program effective April 1, 2018. This renewal process occurs each year in April and is part of the contract agreement between Great West Life (GWL) and GNL. The carrier (GWL) looks at claims experience and market trends to project the requested increases for the plan. This memorandum is intended to highlight the most important aspects of the renewal changes.

Plan Surpluses

  • The Supplementary Health & Basic Life and Dental benefits are subject to refund accounting. This means that after claims are paid from premiums collected, any surplus funds are retained in the program.

Supplementary Health Insurance (Including travel insurance)

  • The supplementary health insurance premium is a blended premium of both health and travel insurance. Effective April 1st, the carrier requested a 9.88% increase in premiums to be applied to the health insurance portion. This year 50% of the proposed increase will be funded from the Health & Life surplus and the remaining will be funded from an increase in premiums. This will result in a reduction in the plan’s accumulated surplus and higher future premium increases to cover inflation/claims experience. The travel insurance represents a very small portion (3%) of the total supplementary health premium. There is no change in the travel portion of the premium for the April 1, 2018 renewal. The combined health and travel insurance premium increase is $0.87 bi-weekly for single coverage and $2.19 bi-weekly for family coverage.
  • Effective April 1, 2018, the new bi-weekly premiums for supplementary health insurance (including travel) will be increasing from $18.06 to $18.93 for single coverage and from $45.58 to $47.77 for family coverage. Optional Dental Insurance:
  • Currently, dental claims are reimbursed based on the 2016 Newfoundland and Labrador Dental Association Fee Guide. As of April 1, 2018 the dental plan will now reimburse expenses based on the 2017 Newfoundland and Labrador Dental Association Fee Guide thus resulting in higher claim reimbursements for participants. Based on the enhanced guide and claims experience there is a required rate increase of 3.68% for April 1, 2018. The dental plan refund account will cover 50% of the increase and dental premiums will increase by the other 50% or 1.84%. This will result in a reduction in the plan’s accumulated surplus and higher future premium increases to cover inflation/claims experience.
  • Effective April 1, 2018, the bi-weekly payroll deduction will increase by $0.28 for single coverage and $0.61 for family coverage. The new bi-weekly premiums for dental coverage will go from $15.15 to $15.43 for single coverage and from $33.36 to $33.97 for family coverage.

Optional Critical Illness (CI):

  • Effective April 1, 2018 the Critical Illness rate to plan members will increase by 10%.
  • As is the norm, the increase in bi-weekly deductions will depend on the employee’s age, gender and whether you have single or family coverage. An example would be a female age 40 with family coverage will go from $1.46 bi-weekly to $1.61 bi-weekly. Please see attached table.

Optional Long Term Disability (LTD):

  • Optional LTD premiums have been unchanged since inception with GWL in September 2015. Effective April 1, 2018, LTD rate to plan members will increase by 36%.
  • Bi-weekly deductions for LTD will depend on employee’s class (which is an employee’s actual age minus their pensionable years of service) and their annual salary. An example would be a 50 year old employee with 10 years of service and an annual salary of $60,000. Bi-weekly deductions for this employee would increase from $63.60 to $86.40. Other Group Insurance Benefits: All other benefit rates will remain unchanged for the 2018/2019 policy year including:
    • Basic Life Insurance
    • Dependent Life Insurance
    • Basic Accidental Death and Dismemberment benefit
    • Optional Participant Life Insurance benefit
    • Optional Spousal Life Insurance benefit
    • Optional Accidental Death and Dismemberment benefit

If you have any questions regarding these changes, please consult the website noted below or contact:

Email: groupinsurance@gov.nl.ca
Phone: 729-2310
Mail: HRS Service Centre and Corporate Service Delivery Basement, West Block, Confederation Building P.O. Box 8700
St. John’s, NL. A1B 4J6

Website: http://www.exec.gov.nl.ca/exec/hrs/working_with_us/employee_benefits.html

Annual renewal of group insurance program – All active employees with ortho

creynolds Article

This memorandum outlines the details of the annual renewal for your Group Insurance Program effective April 1, 2018. This renewal process occurs each year in April and is part of the contract agreement between Great West Life (GWL) and GNL. The carrier (GWL) looks at claims experience and market trends to project the requested increases for the plan. This memorandum is intended to highlight the most important aspects of the renewal changes.

Plan Surpluses

  • The Supplementary Health & Basic Life and Dental benefits are subject to refund accounting. This means that after claims are paid from premiums collected, any surplus funds are retained in the program.

Supplementary Health Insurance (Including travel insurance)

  • The supplementary health insurance premium is a blended premium of both health and travel insurance. Effective April 1st, the carrier requested a 9.88% increase in premiums to be applied to the health insurance portion. This year 50% of the proposed increase will be funded from the Health & Life surplus and the remaining will be funded from an increase in premiums. This will result in a reduction in the plan’s accumulated surplus and higher future premium increases to cover inflation/claims experience. The travel insurance represents a very small portion (3%) of the total supplementary health premium. There is no change in the travel portion of the premium for the April 1, 2018 renewal. The combined health and travel insurance premium increase is $0.87 bi-weekly for single coverage and $2.19 bi-weekly for family coverage.
  • Effective April 1, 2018, the new bi-weekly premiums for supplementary health insurance (including travel) will be increasing from $18.06 to $18.93 for single coverage and from $45.58 to $47.77 for family coverage. Optional Dental Insurance:
  • Currently, dental claims are reimbursed based on the 2016 Newfoundland and Labrador Dental Association Fee Guide. As of April 1, 2018 the dental plan will now reimburse expenses based on the 2017 Newfoundland and Labrador Dental Association Fee Guide thus resulting in higher claim reimbursements for participants. Based on the enhanced guide and claims experience there is a required rate increase of 3.68% for April 1, 2018. The dental plan refund account will cover 50% of the increase and dental premiums will increase by the other 50% or 1.84%. This will result in a reduction in the plan’s accumulated surplus and higher future premium increases to cover inflation/claims experience.
  • Effective April 1, 2018, the bi-weekly payroll deduction will increase by $0.28 for single coverage and $0.61 for family coverage. The new bi-weekly premiums for dental coverage will go from $15.15 to $15.43 for single coverage and from $33.36 to $33.97 for family coverage.

Optional Critical Illness (CI):

  • Effective April 1, 2018 the Critical Illness rate to plan members will increase by 10%.
  • As is the norm, the increase in bi-weekly deductions will depend on the employee’s age, gender and whether you have single or family coverage. An example would be a female age 40 with family coverage will go from $1.46 bi-weekly to $1.61 bi-weekly. Please see attached table.

Optional Long Term Disability (LTD):

  • Optional LTD premiums have been unchanged since inception with GWL in September 2015. Effective April 1, 2018, LTD rate to plan members will increase by 36%.
  • Bi-weekly deductions for LTD will depend on employee’s class (which is an employee’s actual age minus their pensionable years of service) and their annual salary. An example would be a 50 year old employee with 10 years of service and an annual salary of $60,000. Bi-weekly deductions for this employee would increase from $63.60 to $86.40. 
Other Group Insurance Benefits:
All other benefit rates will remain unchanged for the 2018/2019 policy year including:
    • Basic Life Insurance
    • Dependent Life Insurance
    • Basic Accidental Death and Dismemberment benefit
    • Optional Participant Life Insurance benefit
    • Optional Spousal Life Insurance benefit
    • Optional Accidental Death and Dismemberment benefit

If you have any questions regarding these changes, please consult the website noted below or contact:

Email: groupinsurance@gov.nl.ca
Phone: 729-2310
Mail: HRS Service Centre and Corporate Service Delivery Basement, West Block, Confederation Building P.O. Box 8700
St. John’s, NL. A1B 4J6

Website: http://www.exec.gov.nl.ca/exec/hrs/working_with_us/employee_benefits.html

CUPE Submission to the Newfoundland and Labrador 2018 Pre-Budget Consultation

CUPE Submission to the Newfoundland and Labrador 2018 Pre-Budget Consultation

creynolds Economy, News Release, Report

CUPE NL supports the position taken by the Common Front NL in urging government to focus on protecting existing jobs in the public and private sectors and invest to stimulate economic growth in the short term.

The real crisis facing the province is not how to balance the books but how to stop rising unemployment. Yes, the deficit needs to be addressed but government’s own forecast is for a balanced budget by 2022.

RBC economists warn Newfoundlanders and Labradoreans face “grim job prospects”. “We see little to stem employment losses in the next two years as the provincial government slims down in efforts to eliminate its deficit, consumers cut back spending, and work on the giant Muskrat Falls project ends in 2019.”

The unemployment rate in Newfoundland Labrador is “officially” 14.5%, more than twice the Canadian average. The real rate – counting people who are involuntarily working part-time, waiting for jobs, or have given up looking – is more than 18%.

RECOMMENDATIONS

CUPE NL offers two recommendations to government:

1. Stimulate economic growth by investing to reduce inequality, and
2. Reduce expenditures and create efficiencies by cancelling the P3 deals

REDUCE INEQUALITY

Statistics Canada reports that the gap between the highest salaries and the lowest incomes in St. John’s is the highest of the Atlantic Canadian census metropolitan areas. (See Figure 1.) The top one percent take home nearly nine times more than the bottom 30 per cent, and nearly seven times more than the bottom 50 per cent. The next largest gap is in Gander, then Halifax, followed by Bay Roberts.

Figure 1. Income Inequality Atlantic Provinces Comparison

Figure 1. Income Inequality Atlantic Provinces Comparison

“We definitely should be concerned about it,” says economist Tony Fang who holds the Stephen Jarislowsky Chair in Cultural and Economic Transformation at Memorial University. The incomes of the bottom 30 per cent of people across Newfoundland Labrador are around $20,000 or less a year in a province with the highest cost of living in the Atlantic region.

Fang expects the income inequality in the province to keep growing, and that it will become “a significant social issue.”

There is mounting evidence of a causal relationship between inequality and poor health. Healthcare costs have been identified by the Government of Newfoundland

Labrador as one of the province’s significant costs. Government’s focus seems to be on finding ways to cut spending but CUPE suggests investing in public services instead.

A recent study published in the Canadian Medical Association Journal (CMAJ) concluded that focusing on the social determinants of health such as income and housing can help address the root causes of disease, poor health and premature death.

Spending on social services is an effective way to improve the overall health of the population. Those with the lowest incomes (and consequently the lowest life expectancies) would benefit the most in improved health.

One way to create efficiencies in public services is to increase investments in social services like income supports and housing that will, in turn, lower health care costs.

Inequality should not only be reduced to improve social outcomes, such as good health, but also to sustain long-term growth.

The Organization for Economic Co-operation and Development (OECD) has increasingly focused on the impacts of income inequality. New OCED analysis concludes that reducing inequality boosts economic growth.

Econometric analysis by the OCED suggests that income inequality has a negative and statistically significant impact on subsequent growth. This work finds that countries where income inequality is decreasing grow faster than those with rising inequality.

The impact of inequality on growth stems from the gap between the bottom 40 percent with the rest of society, not just the poorest 10 percent. Anti-poverty programs will not be enough, says the OECD. Cash transfers and increasing access to public services, such as high-quality education, training and healthcare, are an essential social investment to create greater equality of opportunities in the long run.

To tackle inequality, the OECD suggests a focus on increasing women’s economic participation, promotion of employment and creation of good-quality jobs, investing in human capital through better skills and education policies, and, finally, redistribution through taxes and transfers.

These policies are especially important for rural communities who have borne the brunt of deindustrialization and declines in resource-extraction industries. Often public services like schools, hospitals, and long-term care facilities are the best jobs in small communities. By extension the job security and health and welfare benefits afforded to unionized employees at these public facilities, most often women, keep families and communities together and healthy. These public sector services and jobs also sustain private sector businesses.

Tax policy of recent governments has contributed to increased inequality.

Newfoundland Labrador’s personal income tax system has become less progressive since 2008 because of a series of tax cuts. (See Figure 2.)

Figure 2. Income Tax Cuts – Newfoundland Labrador

Figure 2. Income Tax Cuts – Newfoundland Labrador

The bulk of those income tax cuts went to the wealthy. Even with recent increases to personal income taxes, the rate for top incomes is still below the rates that were effective up until 2007.

Not only is Newfoundland Labrador’s top taxation rate lower than nearby provinces, and lower than it was up until 2007, Newfoundland Labrador’s top rate only begins to apply at a much higher income level than in most other provinces. (See Figure 3.)

Figure 3. Top Income Tax Rates – Atlantic Provinces

Figure 3. Top Income Tax Rates – Atlantic Provinces

Government can reduce inequality by making the income tax system a more progressive one.

Another way to reduce inequality is to raise the minimum wage. CUPE urges Newfoundland Labrador to follow the lead of Governments in Alberta, Ontario and B.C. and increase the minimum wage to $15 an hour.

A $15 minimum wage would significantly boost the income of low-wage workers as a group, reduce working poverty and make a dent in the large increase in income inequality. Although $15 an hour is not a living wage, it is a step in the right direction.

Increasing the minimum wage is also a stimulus to the local economy because low-income earners spend most of their income and chiefly in their community.

CANCEL THE P3 DEALS

Two recent events add to the evidence that P3s are an expensive and risky procurement model that governments and taxpayers should avoid. They should be of particular concern to this government which has announced the province’s first P3 projects, including a hospital and three long term care homes.

The first event is Ontario’s Auditor General Report released in December 2017 exposing further problems with P3s in that province. The Auditor General singled out P3 hospitals and maintenance contracts for particular attention. The Corner Brook P3 long term care home and hospital will include maintenance contracts.

The Auditor General identified five key problems with the maintenance of the 16 privatized P3 (“public private partnership”) hospitals in Ontario:

  1. Long-term ongoing disputes with privatized P3 contractors over the P3 agreements, including about what is covered by the P3 contract.
  2. Hospitals are required to pay higher than reasonable rates to the P3 contractor for maintenance work the contractor has deemed to be outside of the P3 contract. In other words, Ontario hospitals are being gouged by P3 contractors on maintenance work that is not covered in the original contract.
  3. Hospitals are experiencing funding shortfalls for their P3 maintenance agreements.
  • Four hospitals that the Auditor General spoke to have either requested additional funding from the Ontario Ministry of Health and Long-Term Care (MOHLTC) or informed the Auditor General that they had experienced a funding shortfall but had not made a request for additional funding from the Ministry. These hospitals advised the Auditor General that the total funding shortfall was $8.1 million in 2015/16.
  • The MOHLTC has provided some extra funds for the P3 hospitals to deal with these shortfalls, but, according to the hospitals the Auditor General spoke to, the additional funding provided by the Ministry does not cover the full amount of the shortfall. Management at the hospitals informed the Auditor General that they have been required to reduce funding in other areas within their existing budgets to make up these shortfalls.
  1. Two key benefits that hospitals expected from P3 maintenance agreements have not been realized. The two key benefits they hoped for were: [1] that the monthly P3 payments hospitals make would cover all maintenance within the scope of the P3 agreement; [2] and hospitals would transfer the risk of maintaining the hospital to the private-sector company. “However, all the hospitals we contacted informed us that, due to the way that private-sector companies have interpreted the Alternate Finance Procurement [P3] agreements, the hospitals are not realizing these benefits.”
  2. Hospitals informed the Auditor General that the P3 “escalating dispute resolution methods” are collectively time-consuming and ineffective at resolving disputes.

Here are examples of two disputes from the Auditor General’s Report:

  • In one of the hospitals interviewed, 30 out of 84 negative pressure rooms were not in use from May 2015—when the construction of the hospital was determined to be substantially complete—to July 2017, when the private-sector company finally acknowledged and started to address the deficiency. Making these rooms available is the responsibility of the P3 contractor under the maintenance portion of the agreement. According to the CEO of the hospital, this is a serious matter because negative pressure rooms are used for infection control. The hospital CEO further noted that, even after acknowledging the availability failure, the private-sector company was still very slow to respond to and resolve the failure, causing the hospital to suggest that it appeared that the penalties were not significant enough to incentivize faster resolution. To date, the hospital has withheld $139,000, which represents two months’ worth of penalties. As of July 2017, this situation remained largely unchanged.
  • In another hospital, the Personal Alarm System, which is a central monitoring system that is intended to ensure the health and safety of patients, staff and visitors, experienced repeated failures since January 2014; these persisted into 2017. Examples of the failures include false alarms, system slowdowns, security office camera problems, and door lock issues. The hospital and the private sector company are in dispute regarding the amount of penalty, in the form of deductions against payments to the private-sector company. The hospital has asserted that the amount of deductions allowed under the AFP agreement totals over $71.4 million over the three-year period, but the private-sector company has not recognized any failures. In addition, the hospital has incurred over $2.3 million in legal, consulting and other professional fees since January 2014 to deal with this issue.

Despite problems such as this, the Auditor General found that P3 companies with poor performance records were still winning contracts – one such company got in on a P3 deal worth $1.3 billion in 2016 and another worth $685 million in 2017. There seemed to be an absolute disconnect between the arm of government awarding the P3 contracts, Infrastructure Ontario, and the Ministries of government managing disputes with the private-sector companies during the maintenance phase of existing P3 projects. As a result, private-sector companies in the consortia that have performed poorly in maintaining buildings—in that they have had many failures and disputes with hospitals and other government entities—have been members of other consortia that have been awarded additional P3 contracts.

This Auditor General report deals with only one (small) aspect of the P3 deals – maintenance. Earlier AG reports have shown major problems with other aspects of the P3 model of procurement.

The second recent P3 development is the collapse of Carillion, a global promoter of public-private partnerships. Carillion sponsored and financed more than 60 P3s as well as holding contracts for facilities management services. In the UK alone, Carillion held contracts to provide food and cleaning services to schools, maintenance and facility management services to hospitals, services in prisons and military bases, among others.

Carillion is involved in 10 P3s across Canada, primarily in Ontario, Saskatchewan and the Northwest Territories. Two hospitals are still in development.

The Government of Newfoundland Labrador relied heavily on the Saskatchewan experience to design and promote its P3 procurement projects. With the Carillion bankruptcy, Saskatchewan may be left with unanticipated 30-year contract obligations for the construction and maintenance of the new North Battleford P3 hospital in which Carillion was a consortium partner. The North Battleford hospital has already been criticized for its costly maintenance contract which was higher than the maintenance budget for the entire former health region.

A second cautionary tale from the Carillion collapse is the role that large accountancy companies such as KPMG, EY, Deloitte, PricewaterhouseCoopers play in the P3 business. In Britain, KPMG is under investigation by the Financial Reporting Council (FRC) for potential breach of the ethical and technical standards for auditors as the House of Commons attempts to grapple with Carillion’s massive debts and pension deficits. There are calls for scrutiny of all of the accountancy firms who have become deeply embedded in the lucrative P3 promotion and revenue streams.

All the large accounting firms that advise governments on P3 proposals – KPMG, Deloitte, EY and PricewaterhouseCoopers – are sponsoring members of the Canadian Council for Public Private Partnerships, the leading lobbying organization for the P3 industry with an explicit mandate to promote and facilitate public-private partnerships.

The Government of Newfoundland Labrador has for all intents and purposes hired EY to manage its P3 contracts. The consultants and accounting firms that prepare the business cases and assessments for the P3 agencies generate considerable income from P3s. How is it possible for EY to provide an independent and impartial assessment of P3 proposals when its ties to the P3 industry run so deep?

CONCLUSION

Higher unemployment and growing inequality threaten the future of Newfoundland Labrador as do P3s which transfer huge costs and risks to future generations.

CUPE NL urges government to make these issues its budget priority.

Download a printable copy of the submission (with sources).